April 27, 2020 - 10:47 AM
Many factors are considered when evaluating the value of civil litigation matters. Traditional considerations of the underlying facts, the strength of the evidence, and applicable law are well known. However, the calculus has changed, and now additional factors must also be considered. Businesses are shuttered. Since the wide-spread shutdowns in mid-March, U.S. workers have filed more than 26 million unemployment insurance claims. The Dow is down approximately 19% since the first week of February. The U.S. economic situation is so serious that even a highly polarized Congress swiftly passed the CARES Act providing in excess of $2 trillion in benefits, which is more than twice the amount allocated for the 2009 Stimulus Package.
Do you think the pre-COVID-19 value of your case remains the same? Doubtful...
Plaintiffs have been laid off from work or otherwise may be under economic distress. Civil jury trials have been postponed, and it is unclear how long it will take the courts to clear the backlog delaying final case resolution. While civil litigation continues with the assistance of remote technology, the pace has slowed.
The settlement calculus for some parties has likely changed. Settlement proceeds may no longer be viewed as a means to be made whole, but instead, as a vital bridge loan, mortgage or rental payments, or income to meet critical business or household needs. A dollar today could be more valuable than $1.25 four to six months from now.
In light of the COVID-19 pandemic, it is advantageous to both plaintiffs and defendants to reexamine the value of their cases. Litigation costs to insurance carriers and companies will be carefully examined to ensure value for monies expended. Plaintiffs may elect to resolve long-running litigation claims now, rather than waiting for their cases to make their way through backed up judicial dockets. Even a 5% discount on a seven-figure claim could result in sizable savings for a defendant and valuable, immediate cash flow for a plaintiff.
When evaluating their cases, practitioners and claims adjusters should consider the following:
- Has the COVID-19 pandemic changed my objectives since the start of the litigation? Have I discussed them with my client?
- Have I contacted opposing counsel and inquired about a possible case resolution recently?
- Do I really need to hire a private mediator or arbitrator to help resolve my case? Can the case be resolved now more efficiently and for less expense?
- Has my client’s economic situation changed, making a discounted settlement in the near term more valuable?
- Have I fully explored and pressed all viable claims for contribution and indemnification from other potentially responsible parties? In economic downturns, these claims take on greater importance, and obtaining defense and indemnification may be more valuable than ever.
Practitioners and claims adjusters will be well-served if they take the time to reevaluate the value of their cases during the current economic downturn. Failure to do so could lead to critical questions later as to why the ultimate outcome could not have been achieved sooner, for less cost, and at a time when the need was greater.
If you have questions, or would like additional information, please contact Jason LaRocco, Partner in Reger Rizzo & Darnall’s Litigation and Insurance Practices groups, at 215.495.6505, or via email at email@example.com. We are working with clients to field inquiries and provide advice and guidance in a wide range of areas and industries during the COVID-19 outbreak. Please be sure to check back regularly for updated information. If you have an immediate need, please contact your attorney directly, or email us at firstname.lastname@example.org, and one of our dedicated attorneys will get back to you shortly.